By way of a February 27 2017 order, the Competition Commission of India (CCI) initiated an investigation into the Haryana Public Works Department (PWD) for the alleged abuse of its dominant position in relation to the tender for construction of a railway bridge in Karnal, Haryana.(1)
Claimant Shri Rajat Verma is a director of the company M/s Dwarika Projects Ltd. The PWD is the government department responsible for the construction of roads, buildings, bridges and other civil construction works in the state of Haryana. Verma argued that the PWD had abused its dominant position by incorporating unfair clauses in the tender document.
The CCI initially dismissed the claim under Section 26(2) of the Competition Act, holding that the PWD was not an 'enterprise' because it was not directly engaged in economic or commercial activities.
However, on appeal, the Competition Appellate Tribunal found that the PWD constituted an enterprise under Section 4 of the Competition Act. It held:
"[If] a department of the Government is engaged in any activity relating to construction or repair, then it will fall within the definition of the term 'enterprise'. We may add that there is nothing in Section 2(h) and (u) from which it can be inferred that the definitions of 'enterprise' and 'service' are confined to any particular economic or commercial activity."
On remand, the CCI found that the PWD was the only procurer of services in the relevant market for the "procurement for construction and repair of roads and bridges through tendering in the State of Haryana" and therefore held a dominant position in this market.
Further, the CCI found that Clause 30(a) of the tender document provided that payment to the contractor would be calculated at the lowest amount of three prescribed criteria. The CCI was of the prima facie opinion that, pursuant to this clause, the PWD could pay the contractor less than the agreed amount. Similarly, Clause 30 of the technical specification prescribed no time limit for the PWD to modify and finalise the drawings, nor did it hold the department liable for delay. The CCI opined that these clauses were unfair and discriminatory, and therefore violated Section 4 of the Competition Act.
The director general was instructed to investigate the matter and submit a report within 60 days of receipt of the order.
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(1) CCI order dated February 27 2017. For full text see the CCI website.